2 Previous correlations that show Gold is severely undervalued

Whilst there is a lot of noise around whether Gold has just transitioned into the next stage of its secular Bull Market, or whether the recent $1300 spot price is just a bounce before Gold heads down below $1000.

There are two charts that IMO can help provide clarity and remove the noise from the manipulation and shenanigans in the paper gold market.

The first is Gold and U.S Debt correlation – As you can see from the chart below, in recent times. there was a very high 93.7% positive correlation between U,S Debt levels and the Gold price.

The fact that we are now seeing such huge divergence between the gold price and US debt levels indicates that Gold priced in U.S Dollars is likely trading well under its fair market value.

Even discounting all the other numerous fundamentals for owning gold right now; including global debasement of fiat currency, huge geopolitical risks, central bank lunacy and slowing global macro. Based purely on this chart if this correlation were to correct Gold should currently be trading North of $2000 oz.

The second is previous Fed Balance sheet and Gold Price correlation –

Whilst the first and second charts are linked through QE to some degree, you can clearly see again that up until QE3 there was a very high positive correlation between the Fed balance sheet and the gold price.

However, since QE3 which has taken the fed balance sheet to a whopping $4.5tr and a balance sheet which has no chance of ever being unwound, without causing global financial turmoil.

You can see again that there is now huge divergence, which indicates that if the correlation was to normalise, Gold should be trading somewhere in the $2500 oz region.

Whenever I hear a lot of noise around the paper price of Gold, I simply keep these charts in mind, because at some point precious metals are going to correct back to their fair market value and based on the trend of Global debt which has increased by $57 trillion since 2007; IMO its going to be somewhere well North of its current $1300 oz.

What a week for Bitcoin, I talk about the new Bitcoin all-time-highs of $3500, the adoption of segregated witness which catalysed the move and allows Bitcoin to scale, and also my approach and thoughts on the Bcash (BCH) (BCC) market.

Commentary taken from World Crypto Network talk on the 6/08/2017 original video here:

“In this final episode of the Keiser Report from Freedom Fest in Las Vegas, Max and Stacy encounter Peter Schiff in the halls of the convention center and challenge him on bitcoin. Max continues his interview with bitcoin entrepreneur Charlie Shrem to discuss the latest drama and innovation in the cryptocurrency space”

With the news that Bitcoin is finally on the verge of scaling with the activation of Segregated Witness. Bitcoin will soon be able to facilitate many more users and transactions, growing the network and its potential value. …Its bigger than fiat !

If your holding Bitcoin long term, Hardware Wallets such as Trezor and Ledger are a mustto protect your Bitcoin from hacks and eliminate counterparty risk that is present when holding Bitcoin on centralised exchanges.

PROSPER IN THE NEW FINANCIAL PARADIGM

"Embraced as a “renegade currency,” U.S. investors contend Bitcoin protects Americans from a decaying dollar. They acknowledge it also threatens the U.S. Federal Reserve, and other central banks, which control fiat currencies around the world. Bitcoin’s whole point, it seems, is to eliminate central banks and investment middlemen across the globe to create a free market virtual ownership society"

Disclaimer

All content on or published by the 'Renegade Investor' website is provided for informational purposes only. 'Renegade Investor' assumes all information to be truthful and reliable; However, the content of this site is provided without any warranty express or implied and we do not guarantee its accuracy. No material here constitutes 'Investment Advice' nor is it a recommendation to buy or sell any financial instrument including but not limited to cryptocurrencies, bullion, stocks, commodities, options, bonds, futures. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility. Any person considering an investment should seek independent advice from a qualified Independent financial advisor on the suitability or otherwise of a particular investment.